Sign-on bonuses

THE CATCH

1. Most bonuses come with strings

• A stay periodLeave early and you may owe some or all of it back
• Paid in pieces?Check when each payment actually lands
• What counts as leavingQuitting, being let go, changing units or going PRN

READ THE CLAUSE

2. Get these answers in writing

1. How long do I have to stay?
2. Is payback prorated, or all of it?
3. Do I repay the gross or what I took home?
4. Do I owe it if I'm let go?
5. Do a transfer or PRN switch count as leaving?
6. How fast would I have to pay it back?

TAXES

3. The bonus is taxable

• Supplemental wagesOften withheld at a flat 22% federal
• Withholding isn't your final taxYour return decides what you actually owe
• Repaying it in a later year$3,000 or less: no deduction. Over $3,000: maybe a deduction or credit
• Ask your employerTo refund Social Security and Medicare tax on what you repay

Sources: IRS Publication 15 (2026) and Publication 525.

STATE LAWS ARE CHANGING

4. Some states limit payback

• California, contracts from 2026Separate agreement, prorated, no interest, 2 years max
• Also in CaliforniaPayback only if you quit or are fired for misconduct; you can take the bonus at the end instead
• New York, from Dec. 19, 2026Targets training-repayment notes; bonus payback can still apply

Sources: CA AB 692 (2025); NY A584-C and S8822. Laws vary by state.

YOU'RE NOT ALONE

5. Regulators noticed

• CFPB, 2023Named nursing among industries where new hires sign training-repayment deals
• Federal noncompete banNot in effect: a court blocked it and the FTC dropped its appeal in 2025

Sources: CFPB Issue Spotlight (2023); FTC.

BEFORE YOU SIGN

6. Protect yourself

• Get every promise in the written contract
• Ask for prorated payback
• Ask what happens if the unit closes or you're let go
• Keep a copy of everything you sign
• Have a lawyer or your union rep read it

Educational only, not legal or tax advice. Checked Oct 8, 2026.